Fan Tokens: A Look at Soccer Teams and Their Cryptocurrency Performance

During last year’s World Cup, the crypto world saw the resurgence of an almost forgotten trend: soccer fan tokens. Sorry – football (for you non-US readers) fan tokens, a concept started by blockchain provider Chiliz back in 2021. In late 2022, while a major crypto exchange collapsed and much of the crypto market eroded, some national team fan tokens were seeing movement on over 500%. It was the perfect intersection of rabid football fandom and supercharged crypto speculation.

Crypto ages in dog years, and it already feels like ages ago. But take a look at any national team fan token during the World Cup, such as Brazil (BFT), the odds-on favorites at the start of the tournament, or Argentina (ARG), the winners, and you’ll be reminded of how quickly these things flew – and then the flop. It was not entirely unexpected. For a tournament that only comes around once every four years, it is impossible to maintain the same fervor for the national team once the dust has settled and the pitch is baked by the Qatari desert sun.

This piece is part of CoinDesk’s Culture Week 2023.

Instead, we’ll look at various club-level teams and their fan symbols: in particular, FC Barcelona (BAR), Arsenal (AFC), Manchester City (CITY) and Paris Saint Germain (PSG). There are currently around 80 fan tokens under the Chiliz/Socios banner. Between league matches and various tournaments, the club teams play almost all year round, and only take a few weeks off in the summer. As such, these club symbols provide the opportunity to analyze what effect, if any, a team’s weekly performance may have on the pieces themselves.

The first of these fan tokens launched in 2021 on a platform called Socios, a social network powered by Chiliz. Chiliz is a crypto protocol in the CoinDesk Culture & Entertainment Sector. Culture & Entertainment (CNE) is one of the seven sectors in the CoinDesk Digital Asset Classification Standard (DACS). CNE represents the collection of projects that aim to decentralize social media, create decentralized game worlds and strengthen direct peer-to-peer interaction between content creators and their audiences.

Through their fan tokens, Chiliz ushers in a new era of supporter team engagement. On the back of that success, as CoinDesk recently reported, Chiliz has set up a $50 million program to invest in new sports-themed Web3 projects. Through Socios.com, these fan tokens allow supporters to vote on various team decisions and may even provide certain VIP benefits as a reward for active participation. Fans can now feel like they have actual skin in the game, that they are “invested” in their teams. But are they?

As it stands, the top soccer fan tokens by market value happen to be the top teams in each of their respective leagues: FC Barcelona, ​​Paris Saint Germain, and Arsenal all have significant leads two-thirds into the season. At a glance, we can conclude that their positions at the top of the fan token market price list are a result of their success on the field this season. But there can be many factors at play. Are these tokens highly correlated with their sector, culture and entertainment (CNE)? Or is their performance just a function of their perennial popularity compared to lesser teams? Let’s dive in.

First, we look at each token’s daily market capitalization performance and compare it to the sector in which it resides: Culture & Entertainment (CNE). The CNE launched at the end of August 2022, so we will adjust the start date for everything to 8/28/22. By looking at market capitalization instead of price, we can correct for the supply values ​​that have increased over time, giving a more accurate representation of the overall enthusiasm for these tokens. In the following chart, we can see that there is a certain correlation between tokens. Of particular note is FTX’s collapse in November 2022, which sent the entire market down.

Next, we’ll examine the sector-adjusted performance to get a better sense of how these tokens stack up against each other. Below we can see that highly correlated moves like the FTX collapse have largely been eliminated with this sector adjustment. In theory, we have removed the broader “Culture and Entertainment Sector” effect from the performance of these tokens. This is where things get interesting. Manchester City and Paris Saint Germain have barely budged. Meanwhile, Barcelona are up almost 250% and Arsenal have done even better at almost 300%.

These teams are all at the top of their respective leagues. But two have moved imperceptibly in terms of market capitalization, and two have more than doubled on a sector-adjusted basis. What is the reason for the difference?

With a little more context, the explanation is clear: Arsenal and Barcelona are making a comeback. The other teams mentioned are proven winners – PSG and Man City are the reigning league champions in France and England. It is priced in. Not only that, but looking at the league competition Manchester City have won four out of the last five seasons; Paris Saint Germain have won eight of their last 10 and even Barcelona, ​​whose heritage speaks for itself, have won 10 of their last 20, although they have not finished first since 2018-2019. On the other hand, Arsenal have been a top team for decades, although they have not won the Premier League since ‘The Invincibles’ days of 2003-2004.

While these fan tokens offer different benefits, they can also offer the opportunity to speculate on the next rising star. Is buying your favorite team’s fan token an investment in the team’s success? Probably not. But if an epic underdog suddenly breaks out at the top of the league, you might be surprised.

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